A key mission of Girl$ on The Money is to teach people how to INVEST.
However, most media, financial networks, and many social media channels focus their efforts on showing the “day trading” side of approaching the stock market – which is very different from investing.
In todays post, my goal is to explain the difference in simple and practical terms. Let’s do this! 🙂
DAY TRADING means you buy or sell stocks based on patterns on a chart. The formal name for this is “technical analysis”.
Traders don’t care much about the fundamentals of the company where they are buying stock. Their main concern is trying to make money quickly within minutes or maybe a couple of days. Whether or not that actually happens is another story.
Traders will rely on what a stock chart “tells them to do” to complete a stock transaction.
On the other hand, INVESTING means you are taking a close look 🧐 at the fundamentals of a business before you buy stock in that business.
You are thinking of yourself as a prospective “part-owner” of that company. If you end up buying shares, the plan is to hold for the long term.
The “formal” time frame for a long term investment is longer than 1 year. However, investors look to hold on to a stock or fund for 3-5 years, preferably longer.
Investors look at financials such as cash, profits, sales, levels of debt, and other important metrics before making a decision. You want to make sure a company is financially stable, has a strong foundation, and it can actually make money as an investment.
Investors also look at other factors, such as whether or not a company is a leader, has a competitive advantage, staying power, and the level of competition and market share.
EVERYTHING I teach within my courses, books, workshops, and my content, in general, is 100% focused on INVESTING.
I’ve never “day traded” a day in my life and don’t plan to. Personally, I’ve always felt like trading is a form of gambling. It is too risky for my taste.
With that said – I do respect each individual’s approach towards the stock market. Just as with personal finance – investing is also very personal.
As an investor, I LOVE the fact that I can call myself a “part-owner” of amazing companies. As those companies grow, thrive, and increase their profitability – so does my investment account :).
And that’s all for this “crash course” on Day Trading Vs. Investing.
Please let me know if this is helful.
If you have any questions, comments, feedback – drop them below!
Upcoming Courses & Resources:
Stock Market Investing Bootcamp – 6 Weeks To Your First Stock (& BEYOND): Enrollment for the Fall 2020 edition of this comprehensive class will open soon. To get on the waiting list and be notified as soon as enrollment opens again, click here. Being on the waiting list also means you’ll get to enroll at a promotional rate.
Understanding Your Investing Options: Starter Guide for Beginner Investors: New to investing and not sure where or how to begin?! This guide is for you! Check out details here.